Are 10-Year Fixed Rate Buy to Let Deals the New Normal?

This week has brought news of new 10-year fixed-rate deals aimed at landlords. While many landlords have deserted the marketplace over the past year or so, owing to the many financial changes hitting the industry, others are determinedly hanging on. For some, the idea of buying a BTL property may become more attractive if they know what their outgoings will be on their mortgage for a fixed period. But is 10 years too long?  The uncertainty of Brexit is leading to a wait-and-see situation in many scenarios. However, it doesn’t apply to the buy to let market. Here, there is a real risk interest rates could go up by the time we reach the March 2019 exit date… assuming it still goes ahead as voted for by the public. This makes a 10-year fixed deal look more attractive for many landlords. It also applies regardless of whether they are new to the market or simply looking to scoop up another property or two. There are, after all, properties entering the market that have been ditched by other landlords eager to exit because of the new rules. Rarely have we ever been in such uncertain times as we are now. No one is sure what the outcome of Brexit will be, whether a deal will be struck or not, or whether the doom and gloom coming from some quarters will pan out or not. It is obvious that some landlords would appreciate the opportunity to secure a 10-year deal they know they can rely on.  Of course, all good deals come with caveats. One lender is offering a 10-year fix with charges applicable if anyone decides to exit early. Those charges apply across the full 10-year period. They illustrate how important it is to make sure you consider all possibilities before opting for a deal. Interest rates are still low at present, however. No one can predict what level they might be at in 10 years from now. Some may go for this BTL deal and be glad they did if rates begin to rise. Landlords who are prepared to stay in the business for the long haul may find this a prudent deal to go after once they have done their sums. It may just provide stability in the most unstable times of all for the buy to let market.

Published on 17 December 2018

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